Robot Blitzkrieg

“blitzkrieg /blits-krēɡ/ noun an intense military campaign intended to bring about a swift victory.”

24hGOLD (“How many Jobs Do Robots Destroy?”) wrote:

“How many jobs do robots – whether mechanical robots or software – destroy? Do these destroyed jobs get replaced by the Great American Economy with better jobs? That’s the big discussion these days.

“So far, the answers have been soothing. Economists cite the industrial revolution [A.D. 1760 to 1840].At the time, most humans replaced by machines found better paid, more productive, less back-breaking jobs. Productivity soared and, despite some big dislocations, society prospered. Some say the same principle applies today.”

We’re told that, like illegal aliens and Muslim immigrants, the robots are our friends. They come in peace. They’re here to help us.

Take a robot to lunch.

However, the Industrial Revolution lasted most of 80 years—at least three generations of people had time to “adjust” to the new technologies. There were “dislocations,” but they were sufficiently slow-moving to protect most people from panic.

Today, the robot invasion is unprecedented in that changes that took up to 80 years during the Industrial Revolution, will take place in a decade or two. The brunt of the robot invasion will be felt by a single generation. There won’t be time for most people to “adjust”. In the midst of this robot blitzkrieg, Congress won’t have time to pass intelligent and reasonable legislation. New laws (or even the lack of new laws) will probably only make matters worse. The sheer speed of the coming robot blitzkrieg will push many people into panic.

Despite all the soothing comparisons of today’s robot blitzkrieg to the past’s Industrial Revolution, two economists who previously embraced all that happy talk about robots have changed their minds. Daron Acemoglu and Pascual Restrepo studied the impact of the increase of industrial robots between 1990 through 2007 on US jobs and wages. They wrote a paper entitled “Robots and Jobs: Evidence from US Labor Markets” for the National Bureau of Economic Research (NBER). In that paper, they reported “large and robust negative effects of robots on employment and wages across commuting zones.”

(By “commuting zones” the authors refer to something larger than a mere “city”. Commuting zones include major cities plus the suburban communities within “commuting distance” of those major cities.)

• According to the NBER paper, robots produce two opposing effects:

First, there’s the “displacement effect” where robots eliminate jobs.

Second, there’s the “productivity effect” as other industries or tasks require more labor and thus create jobs (for example, designing, making, and maintaining robots). But, according to the paper, these “productivity effects” no longer create enough new jobs to compensate for jobs that industrial robots destroyed.

These general observations are interesting, but they become frightening when you read some of the underlying statistics. According to the paper:

•Each additional robot reduces employment by a net of 6.2 workers within the “commuting zone”.

This reduction doesn’t necessarily mean that the introduction of one robot into a particular company will replace 6.2 workers in that company. In fact, it’s arguable that by introducing more robots into a particular company, that company might become so much more productive, competitive and profitable that business improves and more people were hired by that company. Maybe.

However, employment reduction does mean that the introduction of one robot into a company within a particular “commuting zone” will, on average, eliminate 6.2 jobs within that commuting zone.

In other words, you (and 5.2 others) might lose your jobs as “collateral damage” if some unknown company located five miles away in your “communing zone” employed a new robot. You could be fired and not even know why. Hundreds of people, thousands of people, could lose their jobs and not even know why. Unemployment levels could soar as mysteriously as deaths from the Black Plague.

Imagine the psychological impact. Imagine the resulting fear, chaos, and predisposition to violence.

If just ten robots were introduced for every 1,000 workers in a particular “commuting zone,” average wages for everyone in that zone would fall by 7.3%. That’s not an enormous percentage, but bear in mind that most Americans are living hand-to-mouth and paycheck-to-paycheck these days. A 7.3% reduction in wages will push many families into bankruptcy and divorce. A 7.3% reduction in wages might be sufficient to cause an economic depression.

Suppose they introduced twenty new robots for every 1,000 workers in your “commuting zone”. Average wages could fall by almost 15%. That’s not many new robots, but the effect could be devastating to individual workers and to the economy.

About eight months ago, I read a report that China’s #1 industrial province intended to replace 80% of its Chinese workers with robots by 2020. I don’t see how they can do that, but if the authors of that report on Chinese robots are correct, replacing 80% of 1,000 workers would mean an additional 800 robots. Not an additional ten or twenty. Eight hundred. If average wages for the remaining 200 workers fell by 0.73% for each of the 800 robots, the result would be a wage decline that’s irrational and politically impossible unless you like shooting revolutions.

Still, that irrationality illustrates the potentially horrific and seemingly inevitable consequences of the robot blitzkrieg. If it’s cost-effective to replace 80% of China’s low-wage, industrial workers with robots, how many more comparatively high-paid Americans stand to be replaced by robots?

•According to the study, between 1990 and 2007, industrial robots eliminated 670,000 jobs.

Note that the 670,000 jobs lost to robots were lost as of A.D. 2007—ten years ago. We can assume that the rate of increase in robots has not only increased but accelerated. The total current number of American jobs already lost to robots could be as high as two million.

According to the NBER paper, the number of U.S. industrial robots (currently about 2 for every 1,000 workers) is expected to quadruple.

I’ll bet that prediction is unreasonably conservative. I’ll bet there are more than 2 robots for every 1,000 American workers. I’ll also bet that the predicted multiplier will be far more than four.

Nevertheless, if we’d already lost 670,000 jobs by A.D. 2007, and we’ve probably lost two million jobs by today—then, if the number of current jobs “quadruples,” we can speculate that robots may soon replace another eight million jobs. At least.

The robot blitzkrieg does not bode well for the the U.S. economy or U.S. political system. This isn’t merely just another one of our many problems. It’s a revolution, an employment catastrophe, and cause for a massive political conflict that no one will know how to resolve.

5 responses to “Robot Blitzkrieg”

I love Robots myself. I am a retired Skilled Trades Electrician for General Motors and when I was working, we loved Robots. For every Robot the factory put in to save one operator, they had to have 6 to 8 Skilled Tradesmen to repair an maintain the things.

It’s simple. Get in the trades if you are going to get in a factory. Skilled Trades in a in GM is well over a 100K a year job. Not bad for a non collage grad.

Robots don’t pay income tax, medicare tax, and social security tax. In order for the government to get parity between man and machines the taxes on people’s labor need to be completely eliminated. A value added tax is the only realistic replacement unless the government just continues to use the invisible tax of inflation and unlimited money creation.

I expect the government is taxing the benefit called a usufruct. They have established a system of trusts wherein the employee is the fiduciary (see Hutchens vs Maxicenters). The end user is not taxed but the one who has the enjoyment (profit) is taxed. In this scheme you don’t own your own labor but have the usufruct of it and you sell it for your enjoyment (profit).

Just an observation. There is a system. Now all you have to do is discover the model that fits.

Now that machines have arms and legs, there is a big uproar about them as if they are somehow nefarious. Now that machines such as forklifts can now be automated, everybody is in an uproar as if this is somehow nefarious.

What I think is nefarious is that people prefer to be brain-dead automatons trying to make a career out of something like flipping burgers or mowing lawns. Now, in a single generation, they will have to THINK in order to work. However, creative and productive thought is VERBOTEN.

The solution? Get rid of things like forklifts and garbage trucks as these take jobs away from humans.